TruliaTRLA +3.3% Chief Economist Jed Kolko dives into the latest findings from the Trulia Rent Monitor, the earliest leading indicator of how rents are trending nationally and locally. It adjust for the changing mix of listed homes and therefore show what’s really happening to rents.

Among the 25 largest rental markets, rents are rising fastest in San Francisco, Portland, and Seattle, while they’re falling slightly in Washington, D.C., and Philadelphia. San Francisco has not only the steepest year-over-year rent increase, but also has the highest median rent ($3250/month) for 2-bedroom units in the country, edging out the New York metro ($3150). No other market comes close to San Francisco and New York: Boston, the third-most expensive, comes in at $2300. At the other extreme, median rent for a 2-bedroom unit is less than $1000 in Phoenix, St. Louis, and Las Vegas.

Can you imagine how much higher SF rent would be if they threw in Santa Clara County? And there is a bit of a cheat in here, buried deep in the FAQ we discover this nugget:

Some MSA’s [Metropolitan Statistical Areas] are split into Metropolitan Divisions, which we use instead of MSA’s where available. For example, we report the “San Francisco – San Mateo – Redwood City” and “Oakland – Fremont – Hayward” metropolitan divisions separately, rather than the “San Francisco-Oakland-Fremont” MSA. [explanation added –ed.]

October 19, 2013

The conventional definition of the Bay Area was always the nine counties that touched SF Bay somewhere. These were:

San Francisco, which everyone used to acknowledge as The City, because it was a City and a County both!

Alameda, its close-by yet cheaper urban commuter residence, home to Oakland, Berkeley, and of course, Hayward.

Contra Costa, further away, and featuring the lovely features of Richmond contrasted with the excitement of the I-680 corridor.

San Mateo, the nicer bedroom county. Not as nice as Marin, but easier to get to, and more importantly now, waaaaay closer to Google.

Santa Clara, formerly the valley of fruits and nuts, now home to the real economic engines. As in Google and Apple and Facebook and Intel and Cisco and a bunch of other places that make it possible for you to read this blog every day.

Marin, home to aging hippies and even more aging real estate, it’s the whitest part of the Bay Area

Sonoma, rural and removed from, well, everything above.

Napa, even more rural and removed except when the tourists clog up the wineries.

Solano, our very own Stockton on the Bay. That’s a reference to their finances, not their cattle ranching. Vallejo has a different economy.

Yet The Bay Area is often missing from lists comparing different parts of the country because the Census Bureau (now in shutdown mode!) decided to break The Bay Area into two different metropolitan areas. There’s the San Francisco Metropolitan Statistical Area, and there’s the San Jose one. San Francisco also got Alameda, Contra Costa, San Mateo and Marin counties.

Breaking SF and SJ into different metros is utterly stupid. Also, SF gets San Mateo AND Alameda Counties, which have plenty of commuters crossing into Santa Clara County.

I finally found some actual commuting numbers in this chart here. 72 thousand San Mateo County residents commute to SF and 61 thousand commute to Santa Clara County. But… this was in 2010. Lots more people even in SF taking the Google Bus now. (SF-to-SCC commuters was 18K, the reverse was 7K)

You know what else is stupid? This graph. The size of the arrows seems to have little to do with how many commuters they represent when compared to the same size arrow in another county. That big-assed snot-green one coming out of Contra Costa to Alameda? It actually is the biggest inter-county commute, with 120 thousand people crossing the line to get to work. But the two opposed arrows out of San Mateo County, going to SF and Santa Clara County? The baby shit brown one is longer but the purple one represents 10,000 more people. Similarly, the same two colors coming out of Alameda? That fabulous purple arrow is longer and just as wide, but there’s 6,000 more people heading to Silicon Valley than The City.

The chart key says arrow width is what matters, not length. But that’s bad design. A stubby arrow connotes direction but also represents area. A longer arrow should either show a longer commute or also more commuters. And both SF vs SJ (well, SCC) arrows are not equilinear, yet the danged chart doesn’t tell us why that is.

There are more jobs in SCC than any other county in the Bay Area, too, 953K. The next biggest job center is Alameda County with 737K, and The So-Called City is third with 621K.

Feel free to talk about your commute, where your job is in relation to your house, or anything you want. It’s not like we’ve ever removed a post for being off-topic.

If you’re in the middle class and want to buy a home here’s a piece of advice: Move to Ohio (if you’re not already there).

Some 86% of homes in the Akron, Ohio area are within reach of middle-class buyers in the area, the highest share in the nation, according to a report from Trulia, the real estate listings site. The next two cities on the list, with 85% of homes affordable to middle class, are Dayton and Toledo, respectively.

For those of you in the coastal elite who are reading this post for the perverse pleasure of finding out just how unaffordable your city is, you might be surprised to hear that New York isn’t No. 1. San Francisco is the least affordable place to be a middle-class buyer, with only 14% of homes within reach of those making the median San Francisco household income of $78,840, according to Trulia.*

However, we were slightly surprised by the next two most unaffordable places, Orange County and Los Angeles, respectively. New York was the fourth least affordable place to be middle class. After that were San Diego and San Jose and Ventura County.

Sooooo, SF is #1 but Silicon Valley is #6? But note, California completely PWN3D New York and the entire East Coast in the unaffordability sweeps. Washington DC? Shut out by the shutdown. Later, you imperialist running dogs no longer feeding at the public trough for the next few days! When it comes to places nobody can afford to live in, we can revel in our Specialness!

The Trulia link above (yes, of course it works) says that while San Francisco has a 60% higher median income than most-affordable Akron, Ohio, homes there sell for (deep breath, now) seven times as much. Only 14% of homes for sale are affordable to a household earning median income for the area. Even worse, whoops, we mean better, San Francisco has dropped ten more percentage points in affordability since last October when 24% of homes could be purchased by a median income household.

To get slightly wonky, the real formula was what percent of homes’ monthly payments were 31% or less of the median household income, which shows the problem right there. Everyone knows if you want to buy a house in SF, Cash is King. Monthly payment? Might as well ask if they’ll sell you the house for a hogshead of buggy whips.

San Jose’s affordability index per Trulia was 31%, but then again, none of the contenders were anywhere close to SF. Second-place Orange County came in with only 23% of homes rated affordable by the “middle class.”

Trulia also provided a “maximum affordable home price” for each area. Let’s take a look at what you get for that price. Here’s a 5 BR/3 BA in SF at only $10K less than the maximum affordable amount. Of course this house is in Bayview and it has some permit issues, but you can’t have everything.

Contrast to how far your dollar S-T-R-E-T-C-H-E-S in San Jose!

Wow, a gated estate with lots of CAPITAL LETTERS and it’s yours AS IS, which means the seller won’t switch houses on you! And just for giggles, let’s see what an “affordable” house in Akron (highest affordable house: $226K) looks like.

OMG look at that house! Those bricks are going down into a big ol’ pile as soon as The Big One hits! Not only that, it would take at least a couple more hours to get to Google from here than the other two houses we showed you. And when you look out in the boonies like this, notice what you don’t get: a decent fence around the place to keep the nosy neighbors away.

We won’t even get into the difficulty of transferring into Cupertino schools.

July 6, 2013

Any reader of this blog knows that some parts of the Bay Area are just better than others, and that’s what we call the “Real Bay Area.” Do you know where the RBA is? According to this study, it’s probably north of you.

People tend to see the north as more desirable and affluent, in turn fueling stereotypes about where the rich live

Most people, knowing nothing else about a city, would rather live in the northern half of town than in the southern, says Brian Meier, associate professor of psychology at Gettysburg College in Gettysburg, Pa. People tend to see the north as more desirable and affluent, in turn fueling stereotypes about where the rich and the poor live.

"For some reason, people see the north and south as very different," Prof. Meier says. "When all else is equal, people have this bias to think that northerly areas are better or more affluent.

Prof. Meier and co-authors Arlen Moller of Northwestern University, and Julie Chen and Miles Riemer-Peltz, both of Gettysburg College at the time, conducted four studies with groups ranging from 28 to 87 participants to see how "north" and "south" affects housing preferences. The study, "Spatial Metaphor and Real Estate: North-South Location Biases Housing Preference," was published in Social Psychological and Personality Science in August 2011.

We’re going to note a fairly seriously flaw in this study (or at least Tanaka’s description of it) right off the bat: the participants aren’t identified in terms of where they live. We know what schools the researchers did the study out of, but this article doesn’t indicate if the participants were from the surrounding regions, randomly chosen throughout the United States, or were a worldwide sample. And that’s actually an important bit of data. How could they possibly assume that all people, everywhere, prefer the north side of a city when we don’t know if anyone from the Southern Hemisphere was represented? Maybe South is the “better side” in Buenos Aires, Melbourne, and Christchurch. Maybe South is superior if you get too far north as well, as it would get more sun. Northern exposure isn’t a good thing if you want sunlight.

This silly study suggests people are so used to thinking of north as “up” on a map, that they conflate the direction with the emotion. We’ve just found that prices keep heading north as long as you’re looking at the RBA. Although the heat map of Santa Clara County above suggests that high prices are found not in the north, but the northwest and to a lesser degree, the northeast. North Central, though, does not impress..And the map at right shows sales for hot, hot, HOT Mountain View, hottest in the part that is the Exact Opposite Of North.

And… open thread! What direction are you heading to check out Open Houses this weekend? Or, if you’re on vacation and can’t stay away from us, what direction did you head for your getaway?

June 9, 2013

Yes, another danged list! This time San Jose is #8 on the Least Affordable Housing Market list created by Trulia. Not only that, Oakland and San Francisco are ranked even better! Let’s have a look, and also at this article that referenced the Trulia list.

Thanks very much to Burbed reader Petsmart Groomer for sending in the second article.

Affordability is measured as a mortgage payment at 3.8%, 30 year fixed, on an 1800 sf home at median price per sf divided by local average monthly wage for a worker.

Not only that, Oakland and San Jose metros are the 1-2 punch of year over year housing price increases, greater than every other Top 100 metro that Trulia examined. San Francisco is also showing frightening gains at 19.6%, right behind Orange County.

But remember, 8s are very, very lucky. Tell us how you feel about so many California cities on the Least Affordable List? Are you going to keep renting or are you determined to get out there and overbid?

The Wall Street Cheat Sheet piece conveniently left our old nemesis Manhattan and environs off its list by completely ignoring it. After all, if you can’t increase housing prices by double digits, what the heck are you doing calling yourself unaffordable?

Now, what are we going to do about Honolulu? We’d better get those median housing prices up past a million in at least 15 more cities by next week!

May 26, 2013

Now how did this happen? ZipRealty has produced a school ranking report that justifies buyers staying in its own East Bay backyard. A number of news sites ran completelyuncriticalparroting of this news release. Let’s take a closer look to find out exactly how this happened, because there’s a reason there’s a Real Bay Area and the East Bay will never be part of it.

San Ramon Valley, Sunol Glen and Piedmont schools top the list.

EMERYVILLE, Calif., May 16, 2013 – ZipRealty, Inc. (http://www.ziprealty.com) (NASDAQ: ZIPR), the leading online residential real estate brokerage and technology provider, has released its first annual ranking of the Best Places for Families to Live: Top School Districts with Most Affordable Housing in the Bay Area. The public school rankings were compiled by factoring each school district’s School Score on ZipRealty.com with median price per square foot in that district. To be considered, at least 10 home sales must have closed in that school district over the course of 2012.

"We all know lots of factors – not just price per square foot – go into determining home values," says ZipRealty CEO and President Lanny Baker. "Among the most important of these factors for many families today is the quality of local schools in relation to the price of their local real estate. In our ongoing effort to help home buyers make important decisions, we are thrilled to bring these two sets of data together."

ZipRealty’s proprietary School Score ratings measure the performance of each school district, including elementary, middle and high schools on a scale of 1 to 10, with 10 being the highest. ZipRealty calculates School Score ratings based on test-score data as well as student/teacher ratios, says Jamie Wilson, Senior Vice President of Technology.

Notice that dateline? Emeryville. You think a realty portal located in a region with an inferiority complex is going to play fair with school rankings when up against the Real Bay Area? Ha. You can see how this is shaping up with the name of that list: “Best Places for Families to Live: Top School Districts with Most Affordable Housing in the Bay Area.”

Now if you’ve been reading Burbed for more than a couple of weeks, you already know that “Top School Districts” and “Most Affordable Housing in the Bay Area” are Two of Those Things That Don’t Go Together. It’s kind of like finding America’s Top Supermodels Who Live In Trailer Parks. Only the supermodels are probably easier to locate because there’s less overbidding.

But it was the Top 10 on this list that made us write in to ZipRealty to ask just how the heck this list came to be. Have a look:

San Ramon Valley Unified: School Score 9.1/Median Price per SF $304

Sunol Glen Unified: School Score 9.3/Median Price per SF $356

Piedmont Unified: School Score 9.5/Median Price per SF $539

Palo Alto Unified: School Score 9.2/Median Price per SF $885

Castro Valley Unified: School Score 8/Median Price per SF $265

Dublin Unified: School Score 8.4/Median Price per SF $265

Pleasanton Unified: School Score 8.6/Median Price per SF $332

Albany Unified: School Score 8.6/Median Price per SF $419

Benicia Unified: School Score 7.8/Median Price per SF $181

Martinez Unified: School Score 7.8/Median Price per SF $185

Okay, what the heck? Not only is every single school district on this list but one on the East side of the Bay, every single one is also single. Where the hell are the non-unified school districts? And look who’s sticking out like a sore thumb on this list. Yes, everyone’s favorite Palo Alto, sailing in at a Most Affordable Housing Price of $885 a square foot (which is too low because they calculated it more than a week ago).

Needless to say, that Most Affordable Housing figure made us write to ZipRealty’s media contact and ask just how this list was ranked. Their answer is they put all the 9s in one bucket, then ranked the per square foot prices within the rank, then did the same for the 8s, the 7s, etc. The school score itself was calculated based on “test-score data as well as student/teacher ratios.” So Palo Alto and its sky-high price per foot represented the “worst” or Least Affordable of the Most Affordable of the 9s category, which had all of four school districts in it.

We were also sent the full list of 70 school districts, and there actually were some non-unified organizations therein. The highest scoring non-unified district was Los Gatos-Saratoga High School District, with an 8.3 (and a Most Affordable Housing Price of $601 a foot, which then pushed it below the Tamalpais and Fremont Union HSDs, which scored lower but were much more Most Affordable, reinforcing what we said above about those supermodels).

Comparing a high school district (grades 9-12) to a unified district (grades K-12) is batshit insane pretty silly, though. Elementary schools have lower student-teacher ratios because, and stop us if this concept seems a little too technical, but State Law mandates smaller student-teacher ratios for elementary classes. Therefore a Unified district would score more highly, benefitting both from that smaller student-teacher ratio and the resulting higher school test scores than a district that only has high schools. You know, because high schools have… larger classes… and more students in the school from more diverse backgrounds than elementary schools.

Talk about a stacked deck: Alameda County has no high school districts at all, only unified districts. Same with Solano County. And you know else how they shuffled the cards funny? Where the HELL is Cupertino Union School District? You may have heard of them, they’re the one that scores 998 on the danged STAR tests from a couple of their elementary schools. But they’re nowhere to be found on the list. And that’s rather interesting, because we looked up a house in the district on ZipRealty, just to find out CUSD’s ranking.

It’s 9.4, which means it beats every other district on the list except Piedmont (which got a whopping 9.5, or 10.2 on the list of 70 we were sent, which makes us wonder about their copyediting). Yet for some reason there’s no mention of Cupertino at all. Maybe it’s that Most Affordable Housing Price of $750 a foot – except that’s still less than Palo Alto.

Perhaps they only wanted to include school districts that had high schools? Maybe, but that doesn’t explain the presence of two (yes two out of 70) elementary school districts on the list (Howell Mountain and Pope Valley, both toward the bottom). How many of the 70 were unified school districts? 53. And 14 high school (only) districts.

Sorry, that’s whacked, comparing unified districts with high school only. We can run similarly helpful lists, showing East Bay city values jumping by huge margins… and forgetting to mention that they utterly imploded after 2006. Oh wait, that’s what realtards do every time they tell you that NOW IS ALWAYS THE TIME TO BUY.

We’ve helpfully pulled out all the high school districts from the ZipRealty list, to get a better idea of how they rank against each other, since we don’t see the value in comparing apples with horse apples. The two numbers after each high school district are the price per square foot, and the ZipRealty School Score.

Updated 4:30 PM: The number in parenthesis in front is the rank amid all those unified districts. And we’ve separated them into their respective school score buckets, which is how the entire list was ranked (first digit of score, followed by ranking price per foot from least to most).

April 28, 2013

We told you there was a Bay Area real estate bubble. This mercurynews.com (motto: we were once a newspaper, really!) article caught our attention. Not only does it lend support to everything we said about peak housing prices in northwest Silicon Valley and other prime real estate markets, there’s another interesting reveal as well.

The Bay Area’s overheated housing market is restoring thousands of homes to their pre-crash peak values in a ZIP-code-by-ZIP-code recovery that is rapidly spreading from Silicon Valley to the East Bay.

Thirty-four of 185 ZIP codes in five counties have regained or surpassed their bubble-era peak home value or are less than 1 percent from it, according to this newspaper’s analysis of February median values for all homes from online real estate site Zillow.

Another 49 ZIPs are within 15 percent of their previous highs, including 18 in the East Bay. A year ago, only part of leafy Palo Alto had regained the value it lost after Bay Area home values crested in 2006-07.

"Seven or eight years ago, there was really a bubble," said Richard Green, director of the Lusk Center for Real Estate at the University of Southern California. "Now it’s just good real estate where values are returning to near past peaks."

Yes, This Time It’s Different 4.0. This is “good real estate” as opposed to Bay Area Bubble 3.0 which was also considered “good real estate,” as we can see by looking at some of the stories they ran in 2006. Here’s one:

Lenders and real estate experts said home buyers in the Bay Area are used to paying more for housing than home buyers elsewhere, and that many, like Singer, use their homes as a savings plan. Most have figured out how to manage the extra debt, they said. In some cases, borrowers are making smaller down payments than previous generations of home buyers.

“(They) are going to make the lifestyle change necessary to own a home, which may mean that 50 percent of their income goes to their mortgage. . . . (They) don’t go out to dinner, they don’t go shopping anymore. It’s about changing their lifestyle,” said Andrea Lanier, a mortgage broker with the San Mateo office of Bankers Preferred Real Estate Loans.

But what we’d also like you to pay attention to is the map pictured above. Green represents home values above the 2005-08 bubble previous peak, and red means the current value is below the pre-crash peak. And by “values” they mean those Zestimate numbers that Zillow not only made up, they keep changing the historical data retroactively. Hope that’s science-y enough for you because we’re sure convinced!

The first thing we noticed was that there’s green where we expect to find it: along the 280 spine. Where’s the red? Why the East Bay, of course. Now, let’s look at this map next to a few others we’ve featured in the past. As always, you can click on any map to see a larger version.

First, here’s the map above next to a recent Zillow map of negative equity. Difficult to have high home values when the homes are worth less than the “owners” owe on them.

Next, the infamous “Whole Foods vs Walmart” location maps.

And finally, the some of the “Real Bay Area” maps we’ve provided in the past. 2010 is on the left, 2008 on the right.

And here’s the granddaddy.

Hate to say we told you so, but we told you so — about ten kajillion times. Eventually Bay Area Bubble 4.0 will raise East Bay home prices above the last peak, by which point The Real Bay Area (which most certainly does not include the East Bay) will be so expensive that even dual-income Google couples will be Priced. Out. For-EVEH!

Until Bay Area Bubble 4.0 goes all Bubblepopcalypse on us and we start preparing for Bay Area Bubble 5.0. As you load up on gold bars and dried beans, let us know what Open Houses you were checking out, because this is also your Weekend Open Thread!

What’s left is a disposable income advantage index of the 20 metros with the most money left over after paying the housing nut. And, you guessed it. Silicon Valley, as represented by the MSA called San Jose-Sunnyvale-Santa Clara, is totally first on the list. Let’s take a gander at the top five.

Rank

Metro Name

Income after Housing: Month

Income after Housing: Year

1

San Jose-Sunnyvale-Santa Clara, CA

$3,901

$46,812

2

Durham, NC

$3,513

$42,156

3

Washington-Arlington-Alexandria, DC-VA

$3,441

$41,292

4

San Francisco-Oakland-Fremont, CA

$3,342

$40,104

5

Trenton-Ewing, NJ

$3,270

$39,240

New York was Lucky #8, Seattle came in at Less Lucky #13 (right behind a couple of Connecticut metros), and Philly brought up the bottom at #20. This scatter graph shows how the housing costs versus income data looks, and that’s Silicon Valley in the extreme upper right. You should see datapoints labeled as you hover over them.

What makes a metro have so much disposable income? There’s a high correlation between number of knowledge worker jobs (that creative class thing again), at 0.73, high incomes (0.60) and number of college grads (0.53).

March 2, 2013

This is Zillow’s map of negative equity by county in Central California. The more red, the more they bled. You can look at the map by state, by county, and by zip code. At the county level, we can see that the only Bay Area regions that aren’t about to terminate from failure to clot are Santa Clara, San Mateo, San Francisco and Marin Counties. Santa Cruz County is looking a little pink around the neck (it’s 22% underwater) but it’s downright alabaster compared to the abattoir north and east of San Jose. Here are the county by county numbers for 2012.

Bay Area County

Percent of homes w/mortgage underwater

Median Zillow Home Value Index

Decline from peak value

Alameda

25%

$447,100

-30%

Contra Costa

33%(highest 20% in US)

$334,200

-46%

Marin

16%

$716,500

-20%

Napa

30%

$365,100

-42%

San Francisco

10%

$771,100

-3%

San Mateo

15%

$689.900

-15%

Santa Clara

15%

$642,600

-13%

Santa Cruz*

23%

$503,400

-31%

Solano

54%(highest 1% in US)

$202,400

-58%

Sonoma

29%

$357,800

-40%

And here’s a live version for you to play with, although you can also head over to Zillow and see it in action wherever you want to examine.

Disclaimer

The posts on this weblog are provided "AS IS" with no warranties, and confer no rights. The opinions expressed herein are my own personal opinions and only represent the view of Burbed.com's editor. Comments are the views of commenters, not Burbed. If companies, properties, etc are mentioned on this blog, you should assume that I have a financial stake in them. Trust no one.